How can an auditor ensure POSH compliance for organizations.

The Companies (Accounts) Rules, 2014, requires the board of directors to prepare a report based on their company’s financial statements and performance. After the 2018 amendment to this rule, it is now mandatory to also attach a statement on the POSH compliance to the report. However, many organizations are yet to comply with this amendment.

The board of directors comes to know about POSH only during the annual audit of an organization. The auditor usually finds out that the POSH report is missing and asks the organization to include the same. Now, it is practically impossible for an entity to become a POSH complaint during this last moment. Hence, the maximum that is done at this stage is that things are just put on paper. But the compliance in its true sense does not take place.

What does it take to be a POSH complaint?

To start the POSH journey, the following are some of the requirements that need to be met:

1. Any organization with more than ten employees should constitute an Internal Committee (IC).
2. A POSH policy needs to be drafted and circulated among all the employees.
3. The organization should also conduct POSH awareness sessions for its employees.
4. It should file an annual report to the District Officer.

The compliance may appear as simple as ensuring that the above-mentioned points are in place. But, even if an organization constitutes an IC, it fails to meet the legal criteria required for its constitution. The lawyers who take care of the internal legal matters are made the external member of the IC on paper. Another common trend is making friends and acquaintances of the company as external members. This practice creates an unfair and biased environment, which is entirely against the principles of POSH law.

Similarly, POSH policies are also copy-pasted from the internet and prepared just for its sake. But unfortunately, it is not customized to the needs and culture of an organisation. Often there is a lack of awareness, and employees don’t even read or understand such lengthy policies. When it comes to the awareness sessions, employees don’t attend them.

Therefore, complying with POSH in its true sense takes time. It cannot be done overnight or at the last moment when the board’s report has to be filed.

What is the consequence of non-compliance?

An organization that has not complied with POSH may face two-fold consequences. The first one is the legal implications and the second one includes the general repercussions.

Legal implications may include a fine of a maximum of fifty thousand rupees. It can be imposed when a company violates provisions of the POSH Act and any rules framed thereunder. Additionally, the business licences can also be cancelled or not get renewed in the future.
General repercussions include those that may arise due to inefficient handling of POSH complaints. This may usually result from a lack of awareness and improper constitution of the IC by the organization. Some common repercussions are poor public image, high legal costs, low productivity of employees, resignation, granting paid leave, etc.

Therefore, it’s time for the auditors to communicate the earliest possible about the POSH compliance to the companies. So that the companies can begin their journey towards making their workplace safe and secure.

If you are an auditor or HR leader looking for an expert to make companies POSH compliant, reach us at contact@ungender.in